Sourcing the right investment for you
Within the high-yielding city of Aberdeen are three different types of investment property: Buy-to-Let, HMO, and Serviced Accommodation. Learn more about which is right for you by reading below, or click below to get in touch with our team.
Types of Property investment opportunities
1. Buy-to-Let (BTL)
The most straightforward type of investment is what we refer to as a Buy-to-Let (BTL) property, whereby an investor buys a property to rent it out to a tenant. They will gain monthly profit from rental income and long-term appreciation as the property increases in value over time.
Although it's not always the case, landlords typically buy this type of property using cash or bridging finance, and then many choose to raise the standard of the property through a refurbishment. This adds value for the landlord prior to re-mortgaging the property onto a BTL mortgage, ensures full compliance with all Scottish laws governing rental properties, and creates a warm, attractive place for people to live.
For this type of investment, properties can be rented out to either one family, one individual, or two unrelated individuals. When a property exceeds this it is classed as a house in multiple occupation (HMO), which you can read more about below.
2. House in Multiple Occupation (HMO)
Properties where three or more unrelated individuals live as their main place of residence are classed as houses in multiple occupations (HMOs) in Scotland.
In comparison to 'standard' Buy-to-Lets, there are stricter physical standards and licensing requirements that all HMOs must meet to ensure the property is safe and well-managed. For example, HMOs are governed by fire safety legislation, they must obtain planning permission, and all rooms must meet minimum sizing requirements (read more on our Investor Blog by clicking here).
The complex stipulations involved with owning HMOs, alongside the fact that the regulations are frequently updated by both the Scottish government and local councils to improve living and saftey standards, can prove challenging for first-time and experienced investors alike.
Getting it wrong can be costly, which is why many investors choose to work with a team like ours who are experienced in investing and managing HMOs in the local Aberdeenshire area.
3. Serviced Accommodation (SA) or Short-Term Let (STL)
The serviced accommodation (SA) or short-term let (STL) market has experienced considerable growth in many Scottish cities in recent years.
When buying an investment property which you intend to rent out on a short-term basis, it is classed as a Secondary letting in Scotland which is governed by new licensing laws. Certain conditions must be met under the regulations, including fire, gas, water and electrical safety standards, to name a few. Letting without a license can result in bans from operating and fines of up to £2,500 in Scotland.
When it is done right, investing in an STL can be highly profitable. However, the additional regulatory requirements, as well as the considerable daily logistics involved in managing an STL, mean many investors prefer to work with an experienced lettings agency like ours, to ensure compliance and delegate the time-intensive day-to-day management.